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Posted in 'Declined Credit' by Erika Bone

17 October 2016

BrightHouse, the controversial rent-to-own firm, has admitted that the imposition of more rigorous affordability checks is hindering its business model. Since the Financial Conduct Authority took over the regulation of the rent to own sector in 2014, BrightHouse has attempted to allay a number of concerns the FCA raised regarding affordability checks and the treatment of customers who fall behind on payments. These changes, according to its chairman Henry Staunton are “onerous and time consuming” and have, “had a material impact on the level of customer sign-ups and consequently on profit”.

BrightHouse specialises in selling household goods and furniture via weekly payment plans. Typical interest rates range from 69.9% to 99.9% depending on the customer’s credit history and they are targeted towards customers who are unable to obtain credit anywhere else. Since the 2008 recession, rent-to-own companies (along with payday loan providers) have flourished due to the lack of industry regulation and the continuing unwillingness of high street banks to lend to their customers.

In 2015 the rent to own industry came under intense criticism by MPs within the all-party parliamentary group on debt and personal finance, reproaching firms for “preying” on low-income households. BrightHouse is currently awaiting full authorisation from the FCA and has had to make drastic changes to its sign up process and customer acceptance criteria to maintain a “constructive” dialogue with the regulatory body. These alterations caused the company’s customer base to shrink by 0.4% within one year to 31st March 2016 and their contract portfolio fell from £560.1m to £513.8m in less than three months.

A BrightHouse representative stated, “We have worked openly and constructively with the FCA to implement an agreed programme of activity to ensure that our offer is transparent and affordable for our customers. Inevitably this has impacted our profitability in the short term”. Whether there is a longer term impact on firms like BrightHouse with increased FCA requirements remains to be seen.

Erika Bone

Erika has a degree in Politics and International Relations from Plymouth University and enjoys a great passion for interior design. Her articles focus mainly on insolvency and other personal finance issues.


Common reasons for being declined credit


Being declined credit can often lead to both confusion and disappointment. Missing out on a credit card with a great interest-free period or a low interest unsecured loan can also be very frustrating. Indeed, having a credit application declined can often lead to more questions than answers.

It can often be hard to pinpoint a specific reason behind why an application is declined. If a credit application is declined, it is worthwhile contacting the prospective lender in order to see whether they can supply you with any additional information as to why your application was unsuccessful, although it is worth keeping in mind that they do not legally have to provide you with this.

Full Article

30 Mar 2015 by Michael Bolt  in  Declined Credit

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